TaxTMI 
TaxTMI 
2019 (9) TMI 456
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.... The Revenue raised the following grounds of appeal: ''1. The order of the CIT(A) is contrary to law and facts of the case. 2.The ld.CIT(A) erred in deleting the addition towards concealed Gross Profit in Gold and Silver of Rs. 7,20,59,374/-. 2.1 The ld.CIT(A) erred in holding that the presumption of the AC that realizing the value of gold jewellery at gross weight of the jewellery as against the net weight of the gold component in the said jewellery and the presumption with respect to the purity of gold jewellery that equates all jewellery at the same purity have robbed the legitimacy for reworking the Gross profit of the assessee on any revised method of valuation 2.2 The ld. CIT(A) ought to have apprec....
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....evidence. 2.7 The order of the ld CIT(A) has been vitiated by the erroneous belief that 7.2cr variation in GP is attributed on a turnover of 31CR, whereas the actual turnover is 353.23 Cr. The order of the Ld CIT(A) has lost its orientation and is prejudiced by a mistaken notion about the value of GP in relation to the turnover. The order of the Ld CIT(A) as such is erroneous and is inherently biased due to the mistaken notion on the assessee's turnover and GP. 2.8 The ld.CIT(A) erred in holding that the department cannot make unsubstantiated additions when the Act provides sufficient procedures and tools to unearth evidences and bring concealed incomes for taxation. 2.9 The ld. CIT(A) failed to note that valuatio....
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.... it is prayed that the order of the learned CIT(A) may be set aside and that of the Assessing Officer restored''. 3. The brief facts of the case are as under: The Respondent-assessee namely M/s. Khazanchi Jewellers Pvt Ltd is a company incorporated under the provisions of the Companies Act, 1956. It is engaged in the business of manufacturing & trading in gold and silver jewellery. The return of income for the AY 2011-12 was filed disclosing total income of J56,25,840/-. Against the said return of income, the assessment was completed on 28.03.2014 u/s.143(3) of the Income Tax Act, 1961 (in short ''the Act'') at total income of J15,05,49,619/-. After receipt of the assessment order, the assessee preferred an petition before the ld. Pri....
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....e with purity of the gold by observing that assessee has been selling the entire ornaments of gold at the prevailing rate of gold. After making the above observations, the Assessing Officer had proceeded with the estimation of gross profits by holding that value of closing stock was suppressed by the assessee taking note of the fact that value of closing stock of the gold ornaments is only J1,150/- per gram which does not give true picture of the profit earned by the assessee. Therefore, the Assessing Officer had proceeded to estimate the closing stock by adopting average weighted method as against the LIFO method adopted by the Respondent-assessee. Accordingly made an addition of J7,20,59,374/- by alleging suppression of value of closing s....
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....orting to estimation of gross profits cannot be made. In this regard he placed reliance on the decision of Delhi Bench of the Tribunal in the case of Mehta Constructing Co. vs. ITO, New Delhi in ITA No.3167/Del/2010, dated 16.10.2015 for the assessment year 2007- 2008. 8. We heard the rival submissions and perused the material on record. The issue in the present appeal revolves around addition on account of alleged suppression of value of closing stock. On perusal of the assessment order, it is clear that Assessing Officer arrived at the estimated value of the closing stock on the ground that value of closing stock shown by the assessee is at J1,150/- per gram which is very low. The assessment order also shows that assessee had filed det....
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....nd to show that he follows this method of accounting regularly. Reliance in this regard can be placed on the decisions of Hon'ble Supreme Court in the cases of CIT vs. British Paints India Ltd, 188 ITR 44 and United Commercial Bank vs. CIT, 240 ITR 355. It is equally settled principle of law that assessee's method of accounting cannot be rejected as improper merely because it gave him benefit in certain years or because according to the Assessing Officer another method is preferable. Reliance can be placed on the decision of Hon'ble Andhra Pradesh High Court in the case of CIT vs. Margadarsi Chit Funds (P) Ltd, 155 ITR 442 and the decision of Hon'ble Supreme Court in the case of United Commercial Bank (supra), the courts had also la....